AI Bubble Warning: Is the World Heading Towards a 2008-Like Recession?

• India's Economic Survey 2026 warns of an 'AI bubble' forming due to excessive investment in AI infrastructure, potentially leading to a global recession.
• Global AI spending reached $2.5 trillion in 2025, with significant investment in infrastructure, driven by hyperscalers like Alphabet, Microsoft, Amazon, and Meta.
• Many tech companies are funding AI infrastructure off-balance sheet through special funding structures, concealing true risks and potentially leading to debt repayment issues if projects fail.
• A burst AI bubble could impact banking systems, stock markets, and investment funds globally, with a 10-20% chance of a crisis similar to or worse than 2008.
• While India has strong macro buffers, a global crisis could reduce foreign investment and affect its tech sector growth; regulators must strengthen risk management and financial oversight.

Why It Matters: Excessive, debt-fueled AI investment risks a financial bubble, potentially triggering a global recession akin to 2008.